Stiglitz: Japan's '3 arrow' plan has 1 big problem

Japan's efforts to revitalize itself after more than a decade of stagnation have global policy leaders abuzz and hopeful that the nation can turn around its fortunes.

One measure, though, is drawing some doubt: a move toward lowering corporate income taxes in hopes that the savings companies experience will be reinvested in the economy.

Nobel Prize-winning economist Joseph Stiglitz is one such skeptic, believing that corporations would use the windfall for their own benefit.

"We're talking about how they're (going to) raise the consumption tax ... and lower the corporate income tax and pray that the good corporations here will all use the extra revenue to give wage increases," Stiglitz said at the World Economic Forum in Davos, Switzerland. "I know in America it almost surely would not happen. It would show up in bigger corporate bonuses."

Joseph Lago | AFP | Getty Images

US economist Joseph Stiglitz

Japan and the U.S. have high corporate taxes in common: They rank first and second, respectively, on a global scale, and both have made moves toward reducing the burden.

In the U.S., President Barack Obama and Congress have been bickering over conditions under which a decrease would be approved. The president wants corporate tax cuts to be tied to spending for job-creation programs.

The thinking in both cases is that tax cuts free up capital for investment, and at least one Japanese businessman said he's on board.

Yoshiaki Fujimori, president and CEO of LIXIL Group in Japan, said he supports Abe's efforts to get more money in consumers' pockets to help drive demand. Japan has been mired in deflation for years, with the most recent inflation reading of 1.2 percent representing some actual improvement toward growth.